Employee Alignment in Strategic Change An investigative report analysing alignment practices and advising TMT to adapt practise to strategic change Introduction Introducing the company and the case Inalfa The analysis conducted in this report will focus on the company Inalfa, at the moment of this analysis the company holds an workforce of approximately 3000 employees. Inalfa is a family owned supplier of metal products. The company had originally been a producer of heaters for in-home use. As with the introduction of central heating in homes the market declined the company started to focus on car accessories.
During the years the development of sunroof systems for cars was found to be a profitable business and over the years the company grew to be the third largest producer of sunroof systems. While the sunroof business exploded Inalfa also maintained its original operations in metal forming. The metal forming department had grown to be a successful supplier of parts to a variety of clients. It’s largest businesses focussed of the production of parts for the copier manufacturer Xerox and many car accessories as bumpers and door panels for different car brands. esult two business units were designed to give home to all employees and activities. The Business Unit Sunroofs (BUS) and Business Unit Metal (BUM) were implemented to organizationally and financially separate the sunroof and metal activities. Both business units were still financially linked in the holding Inalfa Industries. Under this holding both BU’s were accounted for under the ownership of the family Main effect on the work floor The split brought about a large change in day-to-day activities on the work floor. The metal department has always been the main supplier of parts for the sunroof division.
As the business units now were to operate individually this structure changed. Were formerly employees would be colleagues now they had become client and supplier of each other. Acquisition by ABN Amro Capital The origination of the business units As the sunroof department grew to be more and more successful in its operations, revenues kept growing. The client base kept growing; as clients demanded to have a better insight of the operational efficiency of the sunroof division there came a demand increase transparency. Operations of Sunroofs and Metal needed to be clearly separated.
In 1997 the first ideas originated to split the financial activities of both department through an organizational split between both departments. As a The success of the BUS kept steadily growing and opportunities for growth grew beyond extend of the capital of the family that was still in complete ownership of the company. In order to facilitate further growth the Inalfa Industries embarked on a search for an external investor. ABN Amro Capital was found and acquired a majority of the company ownership. At first the deal was focussed on the acquisition of the complete holding, eventually only the BUS was acquired.
The holding and BUM remained family property. 1 Overall Identity The overall identity of Inalfa can be typified as the ‘Shared Meaning’ paradigm. The characteristics of the ‘Shared Meaning’ paradigm are; a high degree of centralization and formalization. This means that the communication structure is focusing on one central position in the organization. Thereby also the organizational structure is centralized because organizational structure and communication structure are mutual. With centralization there is also a high awareness among employees of who is in charge.
Another characteristic of the ‘Shared Meaning’ paradigm is that the organization is capable to withstand or react on medium to high external turbulence, unlike the ‘Bureaucracy’ or ‘Accountability’ paradigms, whereby the organization is not able to react on high external turbulence. In the case of Inalfa every employee needs to communicate to his direct supervisor and the supervisor has to communicate to his manager, and so on till the top of the organization. The organization is able to react to external turbulence by changing the strategy and the decision that the management ade in 1997. Other specific aspects of Inalfa that typically can be characterized as ‘Shared Meaning’ are; first of all the board of directors emphasized the core values within the whole organization, and create this shared meaning through round the table meetings, specific meeting reports about the core values of Inalfa and the new strategy focus, events and games wherein the underlying core values were used and magazines to spread the core values. The board also used intense group meetings to create understanding of the core values, those meetings are called ‘round the table meetings’.
In other words the management of Inalfa tried to create commitment among employees by sense-making and to create a supportive communication climate. Let them feel that they are a part of the whole as well and they need to fulfill their job in order to make the company successful. The focus on the group and that they acknowledges that the individuals are part of the group is also known as self-enhancement The employees who took part in the round table meetings were asked to communicate the meeting with their department and colleagues; spreading the word about the topics discussed.
Inalfa has a highly visionary leader who takes care of his employees and takes care that every is going according to plan. Centralization & Formalization – High Bureaucracy Shared Meaning Creating commitment by sense-making Accountability Ideology External Turbulence – High Adapted from: (Van Riel, 2011, Introduction Strategic Alligment 2011 GBSM, blackboard) Core values The core values of Inalfa are; to be the Lean and Mean manufacturer and to be Lean competitive in order to fulfill the needs of the market, especially their new costumers’ focus group, the automotive industry, demands such mentality.
Another principle that became important, during this period and the strategic change, is the work relationship between the two business units, their attitude and behavior towards each other. It was important to be aware of the fact that the relationship changed from colleagues to customer-supplier relation and that therefore the management expected a more formal/ business attitude and behavior towards each other. This is also mutual with the Lean and Mean typology, because in order to be a successful Lean and Mean manufacturer Inalfa needed a more professional mentality from their employees.
All this leads to the next core value of Inalfa and that is to be an aggressive competitor within the market. For Inalfa intentions are to be in the second spot in the market, thereby they have the possibility to chase the frontrunner of the market. Another reason not to be the frontrunner is that if they are they’ll need to look at their back all the time, it is more comfortable to chasing someone than to be chased. This created a good atmosphere for aggressive market tactics.
The last important principle that comes from the family type of managing a business is that employees are very important to Inalfa and that the company needs to take care of them. Inalfa does this in order to increase the loyalty, commitment and trust of the employees. The management of Inalfa also knew the families of their employees, and that’s typically a thing that shows that employees are really important for Inalfa. Also as a token of appreciation Inalfa gives employees birthday cards, pies and Christmas gifts. This increased the loyalty, commitment and trust.
Lean & Mean Processes Being an Agressive Market Competitor High Importance of Employee Satisfaction Practical Examples In this section we show some practical examples reinforcing the statement that Inalfa’s overall identity is typified as ‘Shared Meaning’. First example is that Inalfa needed to be able to react on high external turbulence by changing at a fast pace. Therefore Inalfa recruited young flexible employees, as a big part of the current workforce were not capable to change within the timeframe scheduled. Older employees were stuck in their way of working.
To deal with this problem the management of Inalfa decided that the older employees became coach of the younger employees with the aim of a faster growth of this new workforce. Hereby the principle was that existing knowledge and new flexible capabilities were Round table meetings created equality combined. To create awareness of the core values among employees the management of Inalfa organized several soccer tournaments. Those games were primarily mentioned to create awareness of the changing work relationship between the two business units. The work relationship changed from being colleagues into customer-supplier.
In the tournaments Business Unit Roof Systems had to play against Business Unit Metal. By playing play against each other the management of Inalfa created a stronger feeling that they belong to a certain group. It was a successful step gradually shifting the overall Inalfa ‘we’ feeling to a second ‘we’ feeling for the individual Business Units To show employees that they are important for the company, Inalfa held several social events for them. Those events are weekly drinks and monthly dinners. The purpose was especially to create a stronger ‘we’ feeling.
Inalfa sponsored regional sport clubs, like the local soccer club through advertisement boards at the edge of the playing fields. Many employees that were members of those clubs or came to watch a game they could say; Hey I work at that company. This was also a way to create a stronger ‘we’ feeling and to create a certain image in the region of a good employer to work for. Inalfa took care of the club and its employees both during working hours in the factory as well as outside the factory The last example we show here is the introduction of ‘round the table meetings’.
Building team spirit Old and New finding new ways together These meetings were to engage all employees from all different levels of the organization into discussions about the companies actions and strategic direction. The mixed meetings created equality, made the workforce feel well informed and finally allowed them to respond and give feedback. Asking for feedback was a method to check if the employees understood the message and were able to act upon this message. This simultaneously increased the creativity by involving all layers helping to grow ideas or adapt strategic decisions. Specific Identity In the academic theory the overall identity can be split into three specific identity characteristics, those three specific types of identity are; (1) Perceived identity, (2) Projected identity and (3) Desired identity. Perceived identity can be defined as the beliefs of the employees and other members of the organization; what they perceive and experience with regard to the organization. It is the members preferred identity of what the organizational should look like (Albert and Whetten, 1985; Dutton, Dukerich & Harquail, 1994).
Projected identity, also know as expected identity, is the identity that’s displayed in the internal and external environment. Displaying the organization identity could be done by profiling the firm externally through the corporate website, newspaper articles and other external communication tools. Profiling the firm internally through corporate magazines, meetings and other internal communication tools can help to do this. (Dutton, Dukerich & Harquail, 1994; Carroll & Van Riel, 2001).
Thirdly employees and the owners of a company have some thoughts about what the organizational identity should be and this is called the desired identity. Desired identity is also known as ideal identity. (Foreman & Whetten, 2002) Foreman & Whetten, 2002) Our report examines which specific identity traits exist and which gaps are present between the three identity types Within the case of Inalfa the projected identity is the specific identity that is most present within Inalfa. In several ways this specific identity is projected by the management team of Inalfa.
After the strategic change that created the BUS and BUM, the most used tool to project the identity is the ‘round the table meeting’. Other tools that were used to display the expected identity were internal corporate magazines, memo boards, and articles presented in the local newspaper. The identity that is projected is that of a Lean and Mean manufacturer, where the employees are important to the company. Desired identity by the management of Inalfa and also desired by the employees of Inalfa is that of a company that is a good employer to work for, where employees are important, valued and appreciated.
Besides this ideal identity another desired identities of the management of Inalfa is that of a Lean and Mean manufacturer and an aggressive competitor in the market. The identity of Inalfa of a good employer to work for is the perceived identity by the people of Inalfa. Employees are proud to make products for certain clients like Volvo, and BMW. There are small gaps between the specific identities; first of all there is a gap between the perceived identity and the projected identity, the identity of a Lean and Mean manufacturer is projected but not seen as the perceived identity.
The second gap is between the projected identity and desired identity, the gap is that the desired identity also contains that Inalfa wants to be a great employer to work for and that is not directly projected by the management. 3 Pitfalls In this chapter we are looking at two pitfalls when looking at employee communication namely Corporate Silence and Dominant logic. Looking at Inalfa and the split into two business units these pitfalls can play an important role to successfully implement this change. Corporate Silence
Corporate silence can be defined as “the withholding of oral and written expressions of the employee’s organizational circumstances to persons who can effect changes or redress” (Pinder & Harlos, 2001). This can lead to less effective organizational decision making, low employee commitment and trust which may lead to lower motivation, lower satisfaction, higher turnover (Morisson & Milliken, 2000). Morisson & Milliken (2000) recognize different causes that can encourage corporate silence and are applicable to Inalfa.
One of these elements is the high industry competitiveness in which Inalfa is operating and also the strategic focus they have on cost reduction. This can lead to centralized decision making and managerial practices of not soliciting feedback from the employees. Thus seeing the environment in which Inalfa operates it is important to look at corporate silence while it can inhibit the success of the current change process within Inalfa. Within Inalfa they do see the importance of stimulating employee communication and to get the employees to express themselves openly what is called “employee voice” (Morisson & Milliken, 2000).
Introducing so called “round table meetings” the management invited employees from different levels to speak openly with each other about their experiences. This way they tried to create a formal system to share information about problems that occur outside the traditional organizational field. Furthermore they also used different ways of stimulating the employee To conclude we can say that corporate silence can be a threat to Inalfa and the change they implemented. Therefore it is very important to involve the employees in this change and to let them express their ideas.
Inalfa is also a typical family company where employees work for the company for a very long time so there is a low turnover rate of employees. In this setting corporate silence can also be found in the fact that younger employees do not always tell the older more experienced employees or managers what they really think. Another manifestation of this occurrence presented itself in the interview where the interviewee elaborated that there are employees in the company who have worked there for a long time.
These people had difficulties coping with the recent spilt into separate business units. They were called Very Simply Overpaid People (VSOP). They were known to be overpaid due to a long career in the company and were silently accepted in the company because of the softer approach of family culture. When we look at the change process the employees were not involved with the decision making process of this change since it was demanded by the clients and the decision was made top down. This can cause corporate silence because the mployees don’t understand the change or fear to express their thought on it. voice with for instance an idea box or incorporating employee input in the company newsletter. This way they really tried to get a “We feeling” and to involve the employees. Dominant logic The second pitfall is dominant logic (DL) which is “The way in which managers conceptualize the business and make critical resource allocation decisions -be it in technologies, product development, distribution, advertising, or in human resource management” (Prahalad and Bettis, 1986).
So it is a kind of lens that colors the nature of decision making by the dominant coalition (DC) within the company. DL represents beliefs, theories and propositions that have developed over time based on experience. DL gives the company adaptive abilities; it simplifies and speeds up decision making with experience that is based on the current and past environment (Bettis and Prahalad, 1995). Furthermore DL causes a more aligned company since employees adapt to the DL and act according to the DL. But the DL also limits the DC view of imaginable insights and strategic actions (Von Krogh et al. 2000). Within Inalfa there is a strong family culture everybody knows each other and they have a feeling of “ons kent ons (like knows like)”. When Inalfa was split up in two separate business units this somewhat changed to a more business way of working. This change also caused the DL within the business units to change. When a DL is changed the old DL first needs to be unlearned before the new DL can be learned, this is a very slow process (Bettis and Prahalad, 1995). Organizational Change is only possible if the MT is able to introduce and get support for a new dominant logic.
This means that the old DC needs to be persuaded to accept the new DL. Thanks to this slow adaptation of the DL the change process of the split up in two business units can be hampered. A good example of this slow adaptation is seen with the older experienced employees within the company who had problems with adapting to this new DL. As a solution they offered training and coaching to all the employees to adapt to this more commercial thinking. This helped for most employees but not for the older more experienced who kept their old DL.
Inalfa then decided to accelerate the promotion of younger promising employees which knew how to work with this new DL. So it is important for Inalfa to acknowledge the switch the DL has gone through from “ons kent ons (like knows like)” where a lot of things were arranged with under the table solutions between the business units. After the split up it developed to a more commercial way of working. Seeing this change they really need to try to persuade and find support for the new DL within the separate business units. Old New Like knows Like
Commercial Way of Working 4 I. Actions to create alignment This section describes the actions which Inalfa employed to create alignment with practical actions which Inalfa employed to create alignment This section describes the the new developed strategy. These actions had tostrategy. behaviour of the employees These actions had to invoke with the developed invoke of the two business units which enabled them to contribute to the new goals contribute to the new goals of behaviour of the employees which enabled them to of Inalfa.
Anthe end, workforce workforce had been created actions In aligned an aligned was created through following through following actions; V. Favourable terms of employment were introduced to increase loyalty, commitment and trust. Recruitment of younger flexible employees. This was done since a big part of the current workforce was not capable to change within the timeframe scheduled. These employees were stuck in their way of working. The older workforce became coach of the younger employees, with the aim of a faster grow and development of this new workforce. Knowledge and capabilities were combined.
Flexibility increased. VI. Social events like weekly drinks and monthly dinners (mixed) to increase loyalty, commitment and trust as well. VII. Participated in carnival processions, to focus on ‘we’ instead of ‘me’ and to make sure the employees were proud to work for Inalfa. II. Organizing soccer matches to create awareness of the new situation. The work relationship changed from colleagues into customer-supplier. Within this games BUS had to play against BUM VIII. Introducing the company magazine, to create awareness and understanding of the company’s strategy and goals.
III. Introduction of so called ‘round the table meetings’. Those mixed meetings created equality and made the workforce felt well informed and allowed them to respond and gave feedback as well. Asking for feedback was a method to check if the employees understood the message and were able to act upon this message. This simultaneously increased the creativity by involving all layers. IX. Tactical appointment of the HR director to guide the transformation project, since decisions of the HR director always can be overruled by the General Director (Good cop – Bad cop situation).
X. Inalfa gave their employee’s birthday pies, Christmas gifts and they sponsored regional sport clubs (CSR) to increase loyalty and to create goodwill. IV. The results of these meetings were presented in special reports, as Inalfa wanted to share this with internal/ external media. 5 Inalfa. Theoretical Review of Actions This section discusses theory that is not covered in previous chapters with regard to the actions discussed in the chapter herefore. The theories will be used to underpin the best practices and opportunities for improvement for 1.
Strategic aligned behavior model This model is an instrument/managerial effort to manage employee communication within the company. The first element, informing, implicates informing the workforce about the overall company’s strategy, the reasons behind this strategy and what it means for the employees. Through sharing information, the board tries to answer the question how a member can contribute to reach the company’s goals, for each employee. Thus, what the strategy implicates for their daily tasks. Two main tools to inform the employees are media & messaging and cascading.
With media & messaging the company tries to create awareness of the overall ‘message’ and link the common strategy to the specific goals of the different units. For example using newsletters or the usage of intranet. This tool will only work if it is used in a continuous and consistent way (Frank and Brownell, 1989). Cascading is used to create a deeper understanding of the company’s ‘message’. It informs the employees from the top to bottom about the company’s goals and therefore the company’s future direction.
As the information flow’s direction is downward, the company should be warned about the cascading trap, which refers to different interpretations of the overall ‘message’ (Van Riel, 2011: 17). The second element, motivating, implicates the motivation of employees to behave and act in line with the company’s strategy and goals, by explaining the rationale behind the strategy (Van Riel et al. , 2009). A tool to motivate the members is creating a dialogue, which increases the feeling of the employees that they are taken seriously (Van Riel, 2011: 21).
The third element in the SAB-model, developing capabilities, refers to the availability of resources and time that enables the workforce to develop capabilities that are needed to behave and act in line with the company’s strategy and goals. Tools to develop capabilities are workshops and trainings. Media & Messaging Informing Cascading Dialogue Motivating Strategic Aligned Behaviour Recognition & Reward Capability Development Developping Capabilities Adapted from: (Van Riel, 2011: 64) II. Organizational Identity
Members of the organization, who identify themselves directly with the organization’s identity, act more in line with the organizational strategy and goals by showing supportive behavior towards the organization. Organizational identity is defined by Van Riel (2001) as “the perception of „oneness” with an organization”. There are two basic motives which enable employees to identify directly to the organization identity; first self-categorization and second self-enhancement. Self-categorization helps members of the organization to find a place within the company where they can maximize their performances.
The people categorize themselves within a group where they feel comfortable and therefore can maximize their performance. Self-enhancement refers to the confirmation of other group members that a person is a member of the in-group. As van Riel gave as example of self-enhancement, in lecture 3 on April 1st 2011, soccer teams who have red shirts for their team players in the match, can give a red shirt to a new player and in this way the team-players confirm his belonging to the in-group. The players who are substitutes in this match wear a white shirt and therefore the other team-members confirm the belonging of the members to the out-group. Van Riel, 2011: 59). Self Categorization Increases Self Enhancement Efficiency Organizational Identification Results in Organizational Citizenschip Behaviour Adapted from: (Van Riel, 2011: 58) III. Best practices The actions that can be categorized as a success factor of the change situation will now be investigated. These can be used in the future of Inalfa to maintain their success and will be linked to theory, cases and best practices from previous chapters as well. The recruitment of young flexible employees is comparable with the selection process of Interpolis (Santbergen, 2011: 39).
Inalfa and Interpolis select employees which fit their strategy, since this creates automatically alignment. With this action Inalfa putted effort in the development of their capabilities as well (Van Riel, 2011: 15). They did the same by training their older workforce, to get used to the new DL. This development was needed to implement the change, as the present workforce could not have realized the desired change. If Inalfa would have developed the capabilities of their present workforce, it would have taken too much time.
This development was important to create SAB (Van Riel, 2011: 15) within the organization and for the P-O fit. The characteristics and mentality of the employees fitted the needs of the new strategy of Inalfa (Caldwell et al. , 2004). The soccer matches were tactical events to create self-categorization and self-enhancement among the employees (Van Riel, 2011: 59). By making the separation of the two BU’s among the colleagues visual (BUS against BUM) the employees categorized themselves as a BUS or a BUM team player, what was confirmed by all the other team players.
This helped to increase the awareness, understanding and creation of the right attitude for the new situation (Van Riel, 2011: 10). The board of IGGY’s and TNT used this kind of games as well to increase the awareness and understanding of the company’s strategy and goals and to make sure the employees had the right attitude towards the organization. (Bonanna, 2011) (Van Riel, 2011). Introduction of round the table meetings with all layers. First, this was a soft tool, which works best in the long run to create alignment (Van Riel, 2011: 18).
This matched the vision of Inalfa, as they had a focus on the longer term. This tool increased storytelling, the internal communication and the feeling among the workforce of being more empowered within the organization (Van Riel, 2011: 18). All these aspects invoked feelings of trust, commitment and feelings of an open communication climate, which directly decreased the organizational silence within Inalfa (Morrison and Milliken, 2000). These meetings enabled the members to gave their opinions and it felt like they were taken seriously by the board, without any repercussions.
The employees felt they were supported by the management as well, which indirectly increased alignment by increasing the P-J fit (Caldwell et al. , 2004). These meetings gave their workforce a feeling of ‘we’ as well (Van Riel, 2011: 44), since every layer was invited to these meetings. Therefore all layers were well informed about the new situation, what increased the SAB and decreased the cascading trap (Van Riel, 2011: 15). The new company’s strategy and goals, the company’s ‘message’, was personally explained by the board to each layer, so no misunderstandings or different interpretations ould rise (slide cascading trap! ). Last, by inviting all layers in the start of the change, the board increased their chances of success, as this have a big influence on the implementation process of the change (Noble, 1999). By publishing reports of the meetings for internal and external media Inalfa tried to be transparent. This tool again invoked feelings of trust, commitment, open communication climate (slide) and feelings of being well informed. And second, it made the employees more aware and it gave them a better understanding of the company’s ‘message’, as everything was written down.
Every step in this change process was visual for every member of Inalfa and every employee had access to the same information. This decreased the cascading trap as well. By taking care of favourable terms of employment, Inalfa gave positive consequences of the change situation to every member of the organization and made them feel like the change was fair. This action again increased indirect the alignment by increasing the person-job and person-organization fit (Caldwell et al. , 2004). Also this action was focused on creating trust and commitment.
The employees became more motivated as well, the third element in the SAB-model, to adapt to the new strategy (Van Riel, 2011: 15). The organization of social events, the participation in carnival processions, giving birthday and Christmas gifts and being involved in the regional sport clubs (CSR) created a feeling of ‘being proud’ on working for Inalfa, as they built personal relationships with the employees, did a lot for the community and gave attention to local traditions (Van Riel, 2011). It created again a feeling of ‘we’ (Van Riel, 2011: 44), we participated in a carnival procession and we helped local sport clubs.
It motivated the employees to work for Inalfa. And by giving presents, the members felt obligated to give something back in terms of commitment and trust (Van Riel, 2011: 34). The company magazine was published to inform all employees (Van Riel, 2011: 15). With this action Inalfa tried again to prohibit the cascading trap (slide), by giving all employees the same information. And by informing their members well, they made sure their employees behaved in a desired way. Tactical appointment of the HR director to guide the transformation project, ince decisions of the HR director always can be overruled by the General Director (Good cop – Bad cop situation). This is in contrast with the actions of TNT. The CEO of TNT makes himself vulnerable through shoot-to-kill sessions. He takes all the responsibility for all the actions within TNT. In contrast, the CEO of Inalfa was being covered and protected by the HR-director, while the CEO was the person who made the decisions. (Bonanno, 2011: 12) IV. Opportunities for improvement This section will discuss the actions which failed to reach their initial goal.
By explaining these opportunities for improvement Inalfa can learn from previous mistakes and do a better job in the future. Many of the best practices as round the table meetings, the social events, the magazine, the reports and even the lunchroom were still mixed. Both BUS and BUM got the same information during this period, BUS and BUM still were a lot in contact and there was no clear separation of the two BU’s. This was a barrier for the actions to fully function and reach Inalfa’s goals. It lowered the awareness, self-categorization, self-enhancement and therefore the alignment with the new strategy.
Most of the actions focused on becoming ‘we’. They forgot that the ‘me’ was important as well to understand what the implications of the changes for the employees were. In what way, in practical terms, they could have adapted to the new situation and implemented the change. Focusing on ‘me’ would have increased the feeling of being important as a person, as an individual, to the organization (Van Riel, 2011: 44). The commitment to their personal tasks could have increased and the personal goals could have been more clear to the employees Just as an advice; Inalfa putted a lot effort in informing the employees.
Of course this is important in the creation of strategic aligned behavior. But they had to be warned for the Information trap. Employees perceive the more information they receive, the better it is. But communicating more information is not the solution for every problem within a organization (Zimmermann et al. , 1996). The CEO of Inalfa had to take his own responsibilities, just like the CEO of TNT (Bananno, 2011: 12). As a CEO you are a example of in what way an employee should behave within the organization. A CEO mirrors the desired behavior. The example that Inalfa ave was not to take your own responsibilities and let some else pay the price for your mistakes. Inalfa tried to create an open communication climate. They used the right tools. But still the employees did not felt they had the opportunity to gave their opinion. The employees did not want to criticize the decisions of the board, probably because of the high level of informal culture. There was a kind of organizational silence concerning the change situation. 6 Strategic Alignment Fit In this section the fit between the strategic objectives with the overall identity, specific identity and employee behaviour will be discussed.
But first the acquisition by AAC will be explained in more detail, what are the consequences for Inalfa, their strategic objectives and their organizational identity. In the introduction there is elaborated that AAC eventually acquired only the BUS and thereby BUM stays family owned. Due to the acquisition by ACC Inalfa was split into two separated companies, Inalfa Roof Systems B. V. and Inalfa Metal B. V. The holding of Inalfa before the acquisition by AAC was eventually liquidated, because the CEO and CFO of Inalfa were hired by AAC to run Inalfa Metal B. V. thereby the HR manager and COO remain within the family and needed to run Inalfa Metal B. V. Before the acquisition by AAC the strategic objectives of Inalfa were; (1) Inalfa needs to be more commercial focused, (2) more efficiency focused, (3) to be the second largest in the market, and (4) to be the best supplier their customers can have. The overall identity of Inalfa was characterized by Shared Meaning and a visionary leader. The specific identity traits of Inalfa before the change are to be a Lean and Mean manufacturer and a great employer to work for.
The employees are high aware of the strategic objects due to the ‘round the table meetings’. The understanding and degree of alignment behaviour are medium. After the split of Inalfa into Inalfa Metal and Inalfa Roof Systems there were several new objectives created to fit with the new situation. First Inalfa Metal B. V. had come into bad weather concerning financial threats; the need to survive the bad weather became a new strategic objective of Inalfa Metal. Besides this strategic objective, efficiency focus still remains a strategic objective in order to increase the probability of surviving the bad weather.
Inalfa also got a new problem in terms of the overall identity, because the transfer of the CEO to Inalfa Roof Systems no longer has a visionary leader to The next two diagrams are presenting the strategic fit of Inalfa Metal and Inalfa Roof Systems. First at Inalfa Metal there are two misfits between the objectives and identity of Inalfa Metal; (1) In order to survive and to maintain partially the shared meaning identity they need a visionary leader, and (2) the ideal employer identity has no fit with one of the two strategic objectives.
Because Inalfa Metal need to survive the bad weather there is a possibility that they need to use hard-wired tools, lay-off several employees to cut cost. Besides the two misfits it is favourable to increase the understanding and the degree of aligned behaviour in order to have a stronger fit between the objectives and employee behaviour. Also the overall identity needs to change or shift to another paradigm to improve the fit between survive and shared meaning. Furthermore there are high fits between Changes for Inalfa Roof Systems B. V. ere that they needed to be less employee-focused, because AAC is a more financial driven external investor. Employees are less important than in the family setting of the old Inalfa. Besides this new strategic objective Inalfa Roof Systems adapted several objectives of the old Inalfa, namely the market position, best supplier objectives and the efficiency focus objectives. The specific identity traits were fully changed by AAC, Inalfa Roof Systems needed to have a more commercial thinking mentality and the management style is typically white-collar (professional managers with more business thinking). ead them during the hard times. The specific identity traits of Inalfa Metal were still to be a Lean and Mean manufacturer and a great employer to work for. This hasn’t changed after the split off. survive and Lean and Mean and efficiency and Lean and Mean. Within the case of Inalfa Roof Systems there is no misfit between any objective and identity or behaviour. Still there are several low fits. First there is a low fit between the market position, best supplier and the overall identity including shared meaning and visionary leader.
Second there is a low fit between the efficiency and understanding, and efficiency and aligned behaviour. Furthermore there is a high fit between best supplier and commercial thinking, efficiency and commercial thinking, employee focus and white-collar and best supplier and awareness. Inalfa Roof Systems need to shift the paradigm and furthermore increase the degree of aligned behaviour. In the next chapter, advice, the practical implications to increase these low fits and to eliminate the misfits of Inalfa Metal will be argued. Management Advise
Advising the board and owners of Inalfa on the future In this part of the report there will be given a practical advice, separately to Inalfa Metal and Inalfa Sunroofs. Inalfa Metal is still family owned and has to survive the bad weather they are in. Inalfa Sunroofs is recently acquired by AAC, which has a different future in mind for Inalfa Sunroofs. Both organizations will receive practical advice to fulfill their goal and to regain or remain successful. 7 Management Advice: Inalfa Metal In this part the practical implications for Inalfa Metal to survive the bad weather will be discussed.
Introduction new strategy: To survive the bad weather, Inalfa Metal has to introduce a different strategy. The focus should be on cutting cost and increasing efficiency. Therefore there is a partial shift from the paradigm Shared Meaning to Bureaucracy and Rules & Directives. It is a partial shift, as commitment and flexibility is still important to reach a company’s goals. The efficiency part has to be mostly carried out on the lower levels. Hire CFO and a CEO with particular characteristics: Inalfa Metal can introduce their new strategy while they hire a new CEO.
They need a new CFO as well. These formal figures were assigned to Inalfa Sunroofs. The new CEO has to have a different character than the previous one. Since there is a focus on cost reduction and efficiency, there has to be a CEO with a harder, ‘cut to the chase’-like character and who’swhose focus is on numbers and the business side of the organization. Inalfa Metal can take Mr. Timmer, formal CEO of Philips, as an example for the selection process. Mr. Timmer saved the firm from bankruptcy by high cost reduction (Van Riel, 2011).
CEO has to take responsibility: The present good cop – bad cop situation (CEO – HR Director) in the board, has to change. The new CEO has to mirror appropriate and desired behavior. By openly avoiding responsibility and let someone else pay the price for own actions and decisions, the CEO is a bad example of how the employees should behave in Inalfa Metal. The new CEO Mr. Timmer helped Philips to survive bad weather New Old Bureaucracy Efficiency Shared Meaning Commitment by sensemaking has to take responsibility for his actions and decisions.
Organizing shoot-to-kill sessions with the CEO and other board members is a tool to create awareness of taking your own responsibility, just like the CEO of TNT does. In this case, the CEO mirrors behavior TNT expects from their members. In these sessions every stakeholder can ask for explanations about formal or future actions and decisions. Even actions and decisions out of their personal lives, work-related, can be questioned and discussed. These sessions enhance the trust towards the board members and increase the understanding of the actions and decisions as well.
We do acknowledge that Shoot to kill sessions need appropriate CEO characteristics to make these sessions into a success. Since the newly appointed CEO is not known at this present moment in time. Alternatively the board might introduce other platforms where employees can question organizational goals in other ways that are better controllable by the board by for example not holding the sessions in real time. Focus on a small range of products and activities: Inalfa Metal has a wide range of products they produce.
They have to narrow their focus to a smaller range of products that have the highest profitability and get rid of the less profitable products. With this focus they will become a specialist in a certain market and therefore develop specific knowledge. In the end Inalfa Metal will have a better market position, increase efficiency and decrease their production cost on the work floor. Maintain selection process, kick out older employees & introduce coaches: The older employees are a dilemma within Inalfa Metal. They can be categorized as VSOP, very simple overpaid people.
Inalfa Metal has to continue their selecting process of hiring new employees who fit their new strategy. Interpolis uses this successful selection process as well (Santbergen, 2011). This process will help Inalfa to implement the new DL and to solve the CS concerning the younger employees, who are afraid to speak up to the older workforce. However this process will take too long if all the older employees must be replaced. Therefore they have to partially introduce ‘hard tools’ within the organization; reduce the amount of older employees.
There will be a major time and cost reduction, just as they need to survive the bad weather. Not all the older employees have to be kicked out, while they can function as coach of the new employees. In this way Inalfa Metal can easily share tacit knowledge, gained in the past, with new employees. The development of the capabilities of the new workforce will be fast and efficient in this way. The mix of old and new in the workforce increases flexibility. Introduce database to share knowledge: To get a more aligned company it is important to share and communicate the knowledge throughout the company.
As the coaches make sure that all tacit knowledge is transferred to the new employees, complementary the database transfers all explicit knowledge in a structured and accessible way. Introduce performance measurements and performance based payments: Inalfa Holding introduced favorable terms of employment. As there has been a shift of focus, there can be recommended to adapt these terms of employment. Inalfa Metal should not give ‘favorable terms of employment’ directly to their workforce, while there is a focus on cost reduction and efficiency.
Performance based payments would work in the best interest of the new strategy. Inalfa Metal has to introduce a system that measures the performance of all individual employees and based on this performance Inalfa Metal can give extra incentives or bonuses. As Inalfa Metal is a production firm, it is most useful to measure the output and the quality of the output of each employee on the work floor. Inalfa Metal has to organize an information session, as it is necessary to explain why the changes will take place. Awareness of the reasons for changes decreases resistance and incomprehension.
Finding an external investor: Inalfa Metal has an old machinery park, which needs to be improved by new machinery purchases. By looking at the numbers of the organization, there can be concluded that Inalfa Metal cannot afford to buy this machinery itself. Like in the Iggy’s Case, Inalfa has to find an external investor. Iggy’s did not have the resources to meet market demand. At that time they had two options; either narrow their focus and reject new customers or recruit an external investor and expand their businesses.
Inalfa finds itself in a similar situation as Iggy’s was on this point in time. They had to find an external investor to meet the efficiency, quantity and quality requests of the market to improve and solidify their market position. Maintain social events & reshape round-the-table sessions: While trust and commitment are still important to be a successful organization, Inalfa Metal has to maintain the face-to-face round-the-table meetings and the organization of social events for teambuilding. It decreases the resistance towards the new leader and organizational silence within Inalfa Metal.
While it increases the commitment, trust and feelings of being taken seriously. To adapt the round the table meetings to a new period in time, to involve more members and to increase awareness and understanding of the new company’s message, Inalfa Metal would benefit from filming and summarizing these meetings in short videos. These videos can be placed on the website or in an e-newsletter. Remove organizational silence & avoid resistance;“Hire McKinsey! ” Within Inalfa there was organizational silence concerning the separation of the two BU’s. The employees did not speak up to the board.
They did not want to criticize the ideas of their ‘bosses’, as there was a culture of ‘like knows like’ and the employees had a positive personal relationship with the board. If Inalfa Metal uses these practical implications this situation automatically will disappear, as there will be a partially new workforce and new leadership, which create a new culture. There will be a more formal culture. If Inalfa Metal does not partially fire the older employees and therefore maintain the present dominant logic of ‘family owned company’ and ‘like knows like’ there will be a lot of resistance to the new situation.
Another recommendation to decrease the resistance within Inalfa Metal is hire an external advisor as first step in the process. It will legitimize the changes that will be implemented next, therefore increasing their chance of success significantly. Introduction of new tools:The Inalfa Holding used multiple tools to create awareness and understanding of the company’s message and strategy. Therefore they created a particular attitude/dominant logic toward the organization. There are no negative comments about these tools they used, only Inalfa Metal has to adapt these tools to a new period in time.
Inalfa Metal should create awareness, understanding and a particular attitude with tools like intranet/share point, social media, e-letters and chat sessions. 8 Management Advice: Inalfa Roof Systems In this part the practical implications for AAC to solidify the success of Inalfa Roof Systems will be discussed. Introduction new strategy: AAC has to introduce a new strategy within Inalfa Roof Systems, as the present strategy of Inalfa does not fit the overall strategy of AAC. It has to shift towards a costefficient strategy with a more commercial focus.
Therefore there is a shift from the paradigm Shared Meaning to Bureaucracy and Rules & Directives. It is a partial shift, as commitment and flexibility is still important to reach a company’s goals. The efficiency part has to be mostly carried out on the lower levels. Develop a new leadership style; “Hire HAY group! ”: AAC has to hire an external consultant to evaluate the leadership style. The current CEO still has the mentality of a ‘family owned’ and ‘like knows like’ organization.
This will have to change as AAC has a different intentionality as owner as the family did. The CEO on this moment might not capable to impose the new strategy and goals. The external advisor can advise AAC and the CEO what has to be eliminated and adapted in his mentality and behavior to prevent failures in the future. Demand to become shareholder: AAC can demand the CEO and CFO to become shareholder of Inalfa Roof Systems. The CEO and CFO were assigned to Inalfa Roof Systems, but still have the mentality of a ‘family owned’ and ‘like knows like’ organization.
By demanding them to become shareholder there is an incentive to align with the new mentality, as they partially own the organization and have a financial interest. It decreases the risk of agency problems between the new owner and the TMT. Mr. Welschen, the current CEO New Old Bureaucracy Efficiency Shared Meaning Commitment by sensemaking Remove organizational silence & avoid resistance; “Hire McKinsey! ” Within Inalfa there was organizational silence concerning the separation of the two BU’s. The employees did not speak up to the board.
They did not want to criticize the ideas of their ‘bosses’, as there was a culture of ‘like knows like’ and the employees had a positive personal relationship with the board. If Inalfa Roof Systems uses these practical implications this situation automatically will disappear, as there will be a partially new workforce and new leadership, which create a new culture. There will be a more formal culture. If Inalfa Roof Systems does not partially fire the older employees and therefore maintain the present dominant logic of ‘family owned company’ and ‘like knows like’ there will be a lot of resistance to the new situation.
Another recommendation to decrease the resistance within Inalfa Roof Systems is hire an external advisor as first step in the process. It will legitimize the changes that will be implemented next, therefore increasing their chance of success significantly. Introduce strict rules for the dispersion of the organizational resources:This department was accustomed to decide and disperse where the budget of the company was spent. There were no strict rules about the dispersion of the resources and when needed resources moved from department to department.
However, it is important to change this way of working, while there is a new strategy with focus on costefficiency. AAC has to come up with strict rules of the dispersion of the budget, so there is a clear report of all the cash flows of the company. This dispersion of the budget will also stimulate the company to set the financial resources in an efficient way. AAC has to continually monitor the financial management tasks and coach this process, as the CFO has to get used to this way of working.
Maintain selection process, kick out older employees & introduce coaches: The older employees are a dilemma within Inalfa Roof System. They can be categorized as VSOP, very simple overpaid people. Inalfa Roof Systems has to continue their selecting process of hiring new employees who fit their new strategy. Interpolis uses this successful selection process as well (Santbergen, 2011). This process will help Inalfa to implement the new DL and to solve the CS concerning the younger employees, who are afraid to speak up to the older workforce.
However this process will take too long if all the older employees must be replaced. Therefore they have to partially introduce ‘hard tools’ within the organization; reduce the amount of older employees. There will be a major time and cost reduction, just as this serve the new strategy. Not all the older employees have to be kicked out, while they can function as coach of the new employees. In this way Inalfa Metal can easily share tacit knowledge, gained in the past, with new employees. The development of the capabilities of the new workforce will be fast and efficient in this way.
The mix of old and new in the workforce increases flexibility. Introduce database to share knowledge: To get a more aligned company it is important to share and communicate the knowledge throughout the company. As the coaches make sure that all tacit knowledge is transferred to the new employees, complementary the database transfers all explicit knowledge in a structured and accessible way. There is a high degree of R&D in the company to develop the new roof systems together with the client. Good management of knowledge can increase efficiency.
Maintain social events & reshape round-the-table sessions: While trust and commitment are still important to be a successful organization, AAC has to maintain the face-to-face round-the-table meetings and the organization of social events for teambuilding. These events play an important role in creating a “we feeling” which has a positive effect on the employee alignment. It decreases the resistance towards the new leader and organizational silence within Inalfa Roof Systems. While it increases the commitment, trust and feelings of being taken seriously.
It stimulates the employees to give their opinion and to speak up about their daily tasks and how they think they can improve the work floor. To adapt the round the table meetings to a new period in time, to involve more members and to increase awareness and understanding of the new company’s message, Inalfa Roof Systems would benefit from filming and summarizing these meetings in short videos. These videos can be placed on the website or in an e-newsletter. Introduce performance measurements and performance based payments: Inalfa Holding introduced favorable terms of employment.
As there has been a shift of focus, there can be recommended to adapt these terms of employment. AAC should not give ‘favorable terms of employment’ directly to their workforce, while there is a focus on cost reduction and efficiency. Performance based payments would work in the best interest of the new strategy. AAC has to introduce a system that measures the performance of all individual employees and based on this performance AAC can give extra incentives or bonuses. As Inalfa Roof Systems is a production firm, it is most useful to measure the output and the quality of the output of each employee on the work floor.
AAC has to organize an information session, as it is necessary to explain why the changes will take place. Awareness of the reasons for changes decreases resistance and incomprehension. Motivate the employees to think commercial: Looking at the new identity imposed by the new ownership structure. Being a more commercial company is important to Inalfa in order to motivate the employees to implement this in their day to day work. This can be achieved by offering training opportunities to the employees to develop themselves.
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